When you look at the values of bitcoin, it does have some major pros and cons.

(...) The major good thing about a lot of cryptos such as bitcoin is that there is a cap. There is 21,000,000. It will never be more unless a hard fork creates more and most likely, it won't be called bitcoin after the fork. (...)

Personally, I think as soon as we get even relatively close to this point the majority of miners will make a hard fork removing that limit and that new fork without the limit will easily become the predominate bitcoin.

Obviously it would be in miners best interest to do this. Furthermore, they have near complete control over the block chain; the only thing that could stop them from forking is if a majority of users of bitcoin refused to switch over.

But what user wants to pay ridiculously high fees as miners try to re-coup their lost income from the lack of incoming bitcoin, or wants to try to hold out on a non-functioning fork with a tiny minority of miners, whose price has just collapsed.
Many large firms (like banks), or the CBOE with their futures contract, will just go along with whatever is more stable and 'normal' (i.e. like normal currencies), and if anything they'd prefer the mild inflationary pressure mining creates.

I mean, potentially it won't happen. But it probably will.

Quote:

Originally Posted by Caleb Sykes

Well, then you can short the stock of the marketplace. Here you go. CBOE just announced bitcoin futures trading.

The market can stay irrational longer than you can stay solvent.
(quote from an article I was reading when futures came out, which I now can't find, which was quoting Keynes.)
Anyway the point is that you can't apply rational views - that bitcoin is over-valued and should correct itself - to an irrational market. Sure, eventually it'l correct itself. But most people would agree that it still has a long way to go before then.

Bitcoins could literally be substituted for a single box of tissues if I got people to believe the tissues were somehow valuable and got thousands of gullible people to buy fractions of them to drive up the price.

Since anyone can start their own block chain or tissue based crypto currency, they are inherently worthless as an exchange value. And only useful as a get rich quick scheme

Adam,

Maybe you have some wonderful inside knowledge (I do not), but I think you may be grossly misinformed regarding cryptocurrencies and blockchain. Forget about the media hype. That is crazy, but the long term value of cryptocurrencies and the security they bring for international business is really promising. It could revolutionize the way we trade value for goods and services. The blockchain is not a mysterious thing. It is a simple public ledger with public and private keys. Governments like the US are fearful of cryptocurrencies because they can not control its value. With the USD, they can literally print money to curb inflation in the US.

In a Nation where 60-70 percent of the things we buy could be bought in BTC the government could not control inflation and interest rates by quantitative easing and I can tell you that is much better for us, the little guys.

I am not saying, "go invest now", but to say cryptocurrencies are a scam is just simply inaccurate and uninformed.

Paul

__________________
In full disclosure I am the President of VEX Robotics, a division of Innovation First International.

In a Nation where 60-70 percent of the things we buy could be bought in BTC the government could not control inflation and interest rates by quantitative easing and I can tell you that is much better for us, the little guys.

This is often claimed, but there is seldom a coherent argument given for why it is the case.

Ideally, in order to avoid deflation (which is very bad for a number of reasons), the amount of currency in circulation should increase roughly at the rate of new wealth creation (or ideally a bit faster than that, since a small amount of inflation provides incentive to keep the velocity up). Currently, we trust central banks to do this.

Advocates of cryptocurrencies tend to claim that cryptocurrencies will do a better job of this, simply because they are "decentralized." Why should I believe this? Bitcoin, for instance, is deflationary as heck. This is very obviously bad for the "little guy."

(...) the long term value of cryptocurrencies and the security they bring for international business is really promising. It could revolutionize the way we trade value for goods and services. The blockchain is not a mysterious thing. It is a simple public ledger with public and private keys. (...)

I'm not sure if crypto currencies themselves will ever pose a particularly large role in their current form, as they don't really seem to solve any issues or... be useful.
BUT the technology behind them (i.e. blockchain) isn't just promising, it is useful. already. In that, the ASX (Australia's main stock exchange) is moving to a blockchain system to handle share transactions. http://www.smh.com.au/business/banki...06-p4yxhe.html That system will have about 4.685 billion AUD flowing through it daily, with stocks valued at about 1.6 trillion AUD being stored. I.e. a lot of money. On blockchain.

Also, here's a whitepaper on "Distributed ledger technology and bank guarantees for commercial property leasing" jointly published by IBM, Scenter Group (westfield's australian domestic half), Westpac and ANZ (both big Australian banks, slightly larger than Goldman Sachs by assets? (but smaller by revenue))

Both of those represent a lot of money being thrown at blockchain; not the sort of money you throw for PR but the sort of money you only throw because you think there's a lot of money to be made (/slaved) there.

To say that cryptocurrencies are equivalent to toilet paper is just not true. Having said that, you are right that bitcoin is only valued highest because it got there first, and other currencies like etherum look much more promising, albeit still kinda pointless as they don't actually solve any issues with money. But the technology behind cyrptocurrencies will and is being utilized for other applications, that appear very promising.

__________________

Last edited by Cabey4 : 12-13-2017 at 05:30 PM.
Reason: stopped shouting the whitepaper name + fixed a mistake with scenter group

There are literally people who have retired because of the wealth accumulated via bitcoin. I think they'd argue you are wrong (so far.)

...there are also people that retire on lottery tickets. This doesn’t make investing in lottery tickets viable.

Valid arguments for cryptocurrencies aside, going “hey, some people got rich riding what’s very clearly a price bubble” is really not a compelling argument for aoption of a currency. Maybe it would be an argument for an investment if it weren’t a bubble, but it’s a bit silly to go “look, somebody got rich, therefore you’re wrong”. There’s a lot better you can do here.

Actually, Paul... my understanding is that inflation is caused by printing money*, and other controls are used to slow down inflation as necessary. I could be wrong.

I'm following this particular discussion more to learn than for any other reason.

*Or otherwise increasing the amount of money available--there's a system, but "printing money" is the simplest to understand.

Inflation isn't very straight forward, and it's surprisingly difficult to control. Simply increasing the quantity of dollars does not cause inflation, especially since most transactions today are done electronically.

If the government printed out several trillion dollars and handed it to me, if I shoved that money under my mattress then nothing in the economy would change, no price increases.
Another situation might be a small town in a zombie apocalypse. Post-apocalypse prices might rise drastically from pre-apocalypse levels, even though the number of dollars in the town is fixed and the supply of goods are uninterrupted (the exact same transactions are occurring). And even if nothing changes for the town, fear can arbitrarily cause inflation.

Bitcoin is not immune to inflation. The total quantity of bitcoin might be fixed but if the (here's the economic term) velocity of money increases, inflation effectively occurs.

...there are also people that retire on lottery tickets. This doesn’t make investing in lottery tickets viable.

Valid arguments for cryptocurrencies aside, going “hey, some people got rich riding what’s very clearly a price bubble” is really not a compelling argument for aoption of a currency. Maybe it would be an argument for an investment if it weren’t a bubble, but it’s a bit silly to go “look, somebody got rich, therefore you’re wrong”. There’s a lot better you can do here.

But nevertheless, people that invested are paying off mortgages, buying cars, etc. Many got in less than a year ago and are doing these things. I don't think that's something you can just discount immediately because you don't believe in bitcoin / cryptocurrencies. I'd argue that way more people have gotten rich off of bitcoin in the past 6 years than lottery tickets. They're not even close to the same thing.

That being said - of course it's a bubble. Anyone that makes money this quickly off of an investment is riding some good luck. Doesn't matter what that investment is - you can get lucky picking stocks too.

As long as the demand is there for bitcoin, why would the value go down? Even if it's purely a speculative investment vehicle, I don't see it going down until a major sell-off happens. That probably will happen at some point though and some people will be left holding the bag on this so to speak. That's why you don't bet the farm on bitcoin or any crypto.

Remember for all investments - past performance is no guarantee for future results. Nobody should be surprised if this crashes to 0 or skyrockets to 100,000.

Definitely concur with Ryan and others who've said not to invest anything speculative unless you can afford to lose it all.

But - what do you do when you find yourself already owning something that is clearly in a bubble? My stock investing club found itself in that situation a few years ago with an outfit named America On Line (AOL). The price started going up, and at one point it was worth about 25% of our portfolio, though we had probably invested about a tenth that much. This was too much money for us to leave at risk, but we also didn't want to cash out too soon when the rocket might have just taken off.

Our answer: we sold half of it. We scored a clear and clean capital gain well in excess of our 15%/year goal, even if the stock were to collapse the next day. Then, when it went up another factor of almost 2, we sold half of what we had left. When AOL acquired Time Warner, we got out because Time Warner is not a growth stock. Doing it this way, we made a bunch of money without ever having too much tied up in a high risk stock.

__________________If you can't find time to do it right, how are you going to find time to do it over?If you don't pass it on, it never happened.Robots are great, but inspiration is the reason we're here.Friends don't let friends use master links.

Last edited by GeeTwo : 12-14-2017 at 07:20 PM.
Reason: Fixed numbers and number of trades